Lunds wants Minnesota Supreme Court to hear case involving family dispute

Lunds Inc. has petitioned the Minnesota Supreme Court to overturn a $45 million award to Kim Lund, the result of her successful quest to cash out her fortune in the family's supermarket chain.

An ugly legal dispute between Kim Lund and her three younger siblings — led by Russell "Tres" Lund — erupted after Kim sought a buyout of her one-quarter stake in Lunds Inc., which owns the Lunds & Byerlys chain.

Kim largely prevailed in state district court in 2017 and did the same last month before the Minnesota Court of Appeals.

So, Lunds Inc. and Lunds CEO Tres Lund took the case to the state Supreme Court this week, saying that the appeals court set a "dangerous precedent" on the legal interpretation of shareholder agreements.

The Supreme Court will likely decide this spring whether to review the case. The court on average agrees to hear 12 to 13 percent of the petitions it receives annually.

Kim Lund first talked about cashing out some of her 25 percent stake as early as 1992. The topic lingered for several years and led to family meetings with wealth counselors from JPMorgan Chase. But amicable attempts failed, and in 2014 Kim Lund sued Lunds Inc. and Tres Lund for breach of fiduciary duty among other claims.

After a five-day trial in 2017, Hennepin County Chief Judge Ivy Bernhardson awarded Kim Lund $45.2 million for her stake, less than the $80 million she sought, but more than double the $21.3 million Lunds Inc. had offered.

Bernhardson ruled that Kim Lund was the "prevailing party" — the winner in legal terms.

The company challenged Bernhardson's approval of the buyout before the Court of Appeals. It contended that Kim Lund couldn't sell her stake without unanimous written consent of the other three sibling shareholders, due to "transfer restriction agreements (TRAs)."

But the appeals court ruled that Kim's desire to sell her stake "cannot be resolved solely through the review of the TRAs."

Also in its ruling, the appeals court said "the district court determined that [Lunds Inc.] frustrated Kim's expectation of liquidity by failing for two decades to propose a divestiture plan or explain their failure to do so."

Lunds offered a "partial redemption" plan to Kim Lund in 2008 — $8 million over 20 years — but that failed to meet Kim Lund's "reasonable expectations" for a full buyout, the appellate court wrote.

In its petition to the Supreme Court, Lunds argued that the Minnesota Legislature in 1994 required that "any written agreements" between or among shareholders "are presumed to reflect the parties' reasonable expectations."

The district court disregarded that legislative mandate, and the Court of Appeals "compounded this error," Lunds Inc. argued in its petition.

Kim Lund's attorneys declined to comment, saying their counter-argument will be laid out in legal briefs due by early March.

Kim Lund, who was a teacher for 30 years, has said she wants to cash out of Lunds largely to use the money for philanthropy.

The grocery company was founded 80 years ago by Kim and Tres Lund's grandfather, Russell T. Lund Sr. Lunds merged with Byerly's in 1997.